European Bank Holiday Today

Today is the Labour Day bank holiday across Europe, and as such their markets are closed, with no data releases expected. What this means for the markets is that investors’ eyes will move away from the Eurozone and instead focus on other markets.

Data-wise we have already had the Nationwide house price index in the UK, which showed a month on month drop of 0.1% in house prices, with the annual figure standing at an increase of just 0.9% – both figures are below analyst’s expectations and as such Sterling has started very much on the back foot this morning.

We are almost a cent down on the 2 month highs we reached against the Euro last week, following this news and yesterday’s movements, although we are still reaching for new highs against the Dollar. This is likely to be caused by the raft of US data coming out in the next 3 days and the market’s anticipation of what might come to pass. Uncertainty inevitably leads to risk averse investors pulling out, and as such the Dollar is suffering ahead of the various data releases.

We have some key US manufacturing data this afternoon, then the FED’s monthly policy announcement, followed by the accompanying statement this evening. In light of recent poor US data releases, highlighted by last month’s diabolical employment figures, will the FED be forced into action? What can they realistically do – interest rates aren’t an option – further injections of liquidity maybe? It is hard to say, but whatever they come up with it is likely to impact the Dollar heavily.

Later in the week we have this month’s US employment data in the form of the non-farm payrolls – as I mentioned, last month it was very significantly below expectations – will we see any improvement?

Whatever happens the US Dollar is in for a stormy few days, so if you have a Dollar requirement keep in close touch with your CI account manager to be kept informed of what is happening, and don’t forget Euro buying prices are dropping as well, so if you need to buy Euros it might be worth taking advantage of the recent highs.